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Smart Shopper Percentage of monthly income spent on a car?
390 messages, Last post on Mar 21, 2009 at 5:50 PM
You are in the Smart Shopper Forum. Your Hosts are kirstie_h & tidester
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Sorry I just can't agree with the never finance a car. It depends on your financial situation and what interest rates are doing right now. Our brand is running 3.9 APR on certain CPO vehicles right now up to the 2004 MY. That is an insane rate on a four year old car so you get the bonus of buying a car that has already depreciated by half or more then half, it is under warranty for two or three years and the interest rate is well below what you can earn in a decent money market account or CD.
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| ...if all you want is an underinsured beater subcompact. I can picture our frugal pal looking a lot like the guy in the "Free Credit Report" TV commercial driving the beat-up blue Geo Metro that stalls at the stoplight as two girls in a convertible laugh at him. The only difference is he'd have a stellar credit rating. | |
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Replying to: joesmith2 (Mar 06, 2008 2:51 pm) Wow! Fraud x2. A federal offense, too! Nice work!
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Replying to: qbrozen (Mar 07, 2008 8:17 am) |
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Replying to: british_rover (Mar 06, 2008 3:36 pm) You must have missed the recent plunge in interest rates, you are pretty unlikely to earn 3.9% in those safe investments right now. My MM is down to about 3.6%. Then you would have to pay tax on whatever you do earn, so even though you could earn fairly close to 3.9%, the after-tax yield would be well below the 3.9%, that you would be paying (with after-tax dollars) on the loan. That said, if somone does not have the cash, that rate would be a good deal...assuming you are not charging an inflated price for the car, to offset the discounted interest rate..
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Replying to: jeffyscott (Mar 07, 2008 12:44 pm) I also doubt rates will stay this low for long. You are better off to lock in the low interest rate for 3, 4 or 5 years then hang onto your cash to put into better investments later then tying up thousands of dollars in a depreciating asset. The 3.9% comes from the manufacturer as part of the CPO program so it is independent of the price of the vehicle as long as it meets the CPO guidelines.
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Replying to: british_rover (Mar 07, 2008 1:39 pm) You could find things that you hope will beat the 3.9%...but when you move beyond things that are essentially risk free that is comparing two different things. Not taking the 3.9% loan is a risk free 3.9% after taxes. With a combined state and federal marginal tax rate of 30%, one would have to earn about 5.6% before taxes. |
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Replying to: joesmith2 (Mar 06, 2008 2:51 pm) You don't like insurance companies. Fine. I don't like lairs. |
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Replying to: joesmith2 (Mar 06, 2008 2:51 pm) Not sure what this is supposed to mean  . That is exactly what an insurance company promises...that they will give you the actual cash value of your car if it is stolen. The price of this protection is the premium paid for "comprehensive". If you don't like the price, you don't have to buy that coverage and you take on the risk of loss yourself. The reality is you are not stealing from the insurance company, you are stealing from all the honest policy holders. We have to pay higher premiums to cover the cost of fraud by others. |
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Smart Shopper Percentage of monthly income spent on a car?
